How much should you invest with a binary options broker? It depends on your situation and trading level, find out what you should know to make an informed decision. If you wish to make profits with trading binary options you have to know how much to deposit. There is alot of people want to succeed in making money online especially from trading but the reality is, that there are only few of them to make it. Few of these have the mindset in right place but cannot afford to lose too much and therefore they do not even start.
How much you should deposit?
For most traders, the first deposit is the “scariest” one – but why? The answer to this question lies among all the complaints against the many binary options brokers we’ve witnessed. That’s not all, trading itself is risky, even with a good broker. These risks are the reason why “how much should i deposit?” Has become such a popular and repeatedly asked question. We’ve examined this topic several times here on bots and there is still a lot to be said on the subject. For the purpose of this article let’s assume you have just found a nice broker and are wondering yourself “how much is safe to deposit?”
We have different types of people with different mindsets when they apply with broker, deposit their money and start trading. I would suggest you are one of the smart ones and actually read everything that is needed about binary options which you can do here on our website. Learn who are regulated binary options brokers and deposit when you have enough money for some good money management and learn first through demo account to get used to it and feel comfortable. If we go through numbers, i would recommend minimum around 400-500$ to start with since you need to have room for mistakes, basically you need to afford to lose. This is the only way you can win and make money and grow at the same time.
How Do You View Your Account
The best thing I can recommend is to stop thinking about your account in terms of dollar value. It doesn’t matter if your account is $200 or $20,0000, you should be thinking about your account in terms of percents. No matter what your balance is it is always 100% of your balance. Using this perspective risk can be quantified in a way that is easy to manage. Most successful traders will only risk losing a small percentage of their account on any one trade. This is known as money management and position sizing. The typical trader will only risk in the range of 1-5% on any trade which means that any one losing trade can only lose 1%, 2% or 3% of the total account. Now let’s look back at the example above. One trader has an account worth $10,000 and one trader has an account worth $200. The trader with the smaller account is making the minimum trade of $5, or 2.5%, on each trade. The other trader, the one with the $10,000 account, is trading positions haphazardly. First one trade is $500, the next is $1,000 and then to try to recoup losses another is made for $3,000 or 30% of the accounts value. You tell me whose account is carrying more risk.
How much can you afford to lose?
Today, you can open your first binary options account with as little as 100-250$. If you lose it all, you’ve only lost a couple hundred. Sure, it might sound safe to make a low deposit but think about it though, you are not trading to lose money but to make money. If you can’t afford to lose your investment then maybe you should focus on paying your bills first. So make sure to only deposit your extra cash – not your life savings. Binary options are no way to try and pay a bill you are behind on. Trying to win the grocery money by betting the rent is a sure way to end poorer. To find out more about what to expect if you deposit your entire paycheck with a broker, read this article: deposit minimum, come collect your $100k’s in 24 years!
How to make a deposit?
I think this is pretty straightforward process but we can go through it. Just register at broker of your choice, navigate to page where you can deposit. Use your preferred payment method, select the amount for deposit and confirm the transaction. It should not be more then few minutes for money to appear in your account unless there are some rules by your broker. After that, you can ask for your bonus.
Most common payment processors you can use for depositing money to your account is credit card, moneybookers or skrill now and wire transfer, which can take up to few days to hit the account.
Does Deposit size really matter?
Perhaps you are asking yourself; “if the returns are so high, does it really matter how big my deposit is?” Well, yes it does! A small deposit doesn’t leave room for many mistakes, less if your minimum investment per trade is too high. Risking only 1% of your account is safer but with a low deposit you might find it frustrating when your trades are only returning $1.85. What can be even more frustrating is of course blowing your balance because you risked too much of your total deposit on one trade. Obviously, if you just want to test the broker, you don’t need to make a huge investment. Just deposit as little as possible to test them first! As soon as you are sure they are okay you can proceed with depositing a bigger sum but don’t trade without a reliable and easy to use strategy. Just how much will your account size affect your trading? Will 200 dollars make you millions? Our article, binary options small deposits – does size really matters?, details some pros and cons of making a small deposit versus a large one.
Is it safe to deposit?
It is perfectly safe if you deposit your money to binary options brokers that are regulated, so i would suggest when you decided for this step to check our recommended brokers. Just be sure that you do your homework and check which ones are regulated and you will be safe since trading binary options is the same form as you would trade stocks or forex – legitimate.
Even with a good money management system you still have to ask yourself one question. Can you afford to lose $200? If you can’t then depositing any amount is risky. Trading binary is not a game even though some brokers might make you think so. This is real money and trading is hard. I don’t care what the ads tell you it is not likely you are going to be able to parlay a $200 minimum deposit into thousands of dollars in only a few days. You are far more likely to lose everything by following one of these scams than you are to break even much less profit. If you can’t pay the rent, if you can’t buy groceries or gas for you car then even a $50 deposit is too risky for you.
What Is The Minimum Deposit You Should Make
Using the minimum deposit definitely does not mean that you have lower risk. It all comes down to if you can afford the minimum and how you trade. You may not have the money, in that case even the minimum is too risky. You may have plenty of money but no discipline, another risky scenario. However, you may have the money to spare and the discipline to trade. In that case taking some risk is a good thing. You have to take risks in order to make money. The key is knowing what is a good risk and what is a bad risk. So, what is the minimum deposit you should make? What you can afford. If you can not afford to lose the money in the first place you should definitely not spend it trading binary options. You wouldn’t spend your rent money going to the casino would you? If you only have $200 that you can truly use that’s OK. There are brokers that can accommodate you. You just need to figure out what your money management is going to be, determine your trading rules, develop a strategy and then stick to it. It will surprise you how quickly $200 can turn into $2,000, and that $2,000 into $20,000. It will take time and dedication but it can be done.
Once you’ve confirmed the broker is ok and your training is completed, it’s time to begin trading. One of the first things to do is assess your risk tolerance and how much you are willing to lose. Some think that risk is the size of your account but does starting with the minimum initial deposit mean you aren’t taking a big risk? Well, this answer really depends on your money-management and the minimum allowed investment with the broker.
Let me demonstrate with an example:
А. Minimum deposit 1000$ – minimum investment/trade 50$
b. Minimum deposit 200$ – minimum investment/trade 20$
In the example above, which account type is taking the biggest risk? Obviously the trader with the smaller account is taking a huge risk. The 200$ account can only take 10 losses in a row (20$) before it’s completely wiped out! That’s a 10% risk profile. The 1000$ account on the other hand, even though the min trade is 250% bigger(!), can withstand 20 losing trades (20×50$) for a risk profile of 5%, much lower. This means that account b needs at least 2,000$ to match a’s profile and withstand 20 losses. What we learn from this example is that we need to take into consideration the minimum investment amount as well as the minimum deposit before funding an account.
Risk less – earn more!
I want to make sure that you’ve come to the same conclusion as i on how much should you really deposit? It all comes down to two things; how much the minimum investment amount is and how much you can actually afford to lose. Trading is risky and we want leverage but with leverage comes risk. Being able to withstand many losses means you’ll have a chance to learn from your many mistakes and losing trades, and trust me there will be mistakes and losing trades. You make millions very fast with only 200 dollars but with the right risk management it can be done. All you need is the right education, lots of patience and disciplined trading to reach success in this business. Remember though, that no matter how large you decide to go to test the broker with a small deposit before you make a big deposit! Sometimes being the nice guy pays off, sometimes it doesn’t.
To know more about binary option click here
Binary Option High School
All Lessons in Part 1: Get started with Binary Option trading